2. Theta Company is authorised to issue 7000 ordinary shares at $2.

00 each,
1200 (6%) $5.00 Preference Shares at an issue price of $6.00 each and 500,
$100 (5%) debentures. On January 1st, 2005, the firm received offers for 6000
ordinary shares and 1000 preference shares and 400 debentures.

Calculate:

1. What is the authorised capital of the company in terms of the number

and value of preference shares and ordinary shares?
Authorized Capital:
Preference Shares – 1200 @ 5.00 - $6000
Ordinary Shares - 7000 @ 2.00 - $14000
2. What is the issued capital of the company in terms of the value and
number of preference and ordinary shares?
Issued:
Ordinary Shares – 6000 @ 2.00 - $12000
Preference Shares – 1000 @ 6.00 - $6000
3. What is the par value of each
a. Ordinary shares $2.00
b. Preference shares $5.00
c. Debentures $100
4. What is the issue price of each – ordinary, preference and debentures?
Ordinary - $2.00
Preference - $6.00
Debentures - $100
5. What is the difference between the issue price and the par value called?
The difference in the preference share was $1.00 and this is called a
Premium.
6. What is the meaning of the 6% in reference to the preference shares?
The Rate of Dividend is 6% of $6.00
7. What is the meaning of the 5% in reference to the debentures?
The Rate of Interest – 5% of $100